What’s Bell Potter’s view on Beach Energy shares after its 9% production dip?

Beach Energy Ltd (ASX: BPT) shares are in focus today after the company’s FY26 Second Quarter Activities Report.

The ASX energy company reported a 17% drop in quarterly sales revenue to $445 million. 

What else did the company report?

In addition to the sales revenue decline, the company also reported: 

• Quarterly production down 9% to 4.5 million barrels of oil equivalent (MMboe)
• Sales volumes fell 13% to 5.9 MMboe
• Average realised gas price rose 2% to $11.9 per gigajoule (GJ)
• Waitsia Gas Plant delivered first gas and peaked at 165 TJ/day after quarter-end
• Liquidity at quarter-end rose to $925 million

Despite a fall in production and sales revenue, the Beach Energy shares climbed 2.73% higher during yesterday’s trading. 

Bell Potter weighs in

Following the report, the team at Bell Potter released updated analysis on Beach Energy shares. 

Bell Potter highlighted that overall realised prices were 5% weaker, with lower oil and LNG prices offsetting marginally stronger gas prices. 

It said Beach Energy ended the quarter with net debt of $445m, a $39m improvement on the prior quarter; adding back $166m capex implies around $205m in cash flows from operations. 

The company also added a new $300m Term Loan to its debt facilities, lifting quarter-end funding liquidity to $925m.

Guidance unchanged 

Beach Energy produces oil and natural gas from numerous joint venture projects across Australia and New Zealand. 

These include the onshore Cooper and Eromanga Basin project, covering one million square kilometres in South Australia, Northern Territory, Queensland, and New South Wales and recognised as Australia’s most prolific oil and gas-producing basin.

Bell Potter said in yesterday’s report that Cooper Basin and Western Flank production recovered from previously flood-impacted quarters and offset weaker maintenance and customer nomination impacted Otway Basin output.

Most of the flood-impacted production in the Cooper Basin and Western Flank has now been restored.

BPT made no change to FY26 guidance: Production 19.7-22.0MMboe; and capex of $675-775m.

Hold recommendation for Beach Energy shares

Bell Potter has maintained its hold recommendation on Beach Energy shares. 

BPT is in a production replacement cycle with respect to exploration and appraisal. Production growth should return in FY27 and capex ease, enabling positive free cash flow to support balance sheet deleveraging and ongoing dividends.

We are positive on BPT’s exposure to Australian east coast gas markets (around half of sales volumes) and cautious with respect to global oil markets.

Based on this guidance, Bell Potter has a price target of $1.10. 

This price target indicates Beach Energy shares are trading close to fair value, after closing yesterday at $1.13. 

The post What’s Bell Potter’s view on Beach Energy shares after its 9% production dip? appeared first on The Motley Fool Australia.

More reading

• 5 things to watch on the ASX 200 on Thursday
• Beach Energy shares trade higher despite production slip
• Beach Energy shares: quarterly revenue drops, Waitsia ramps up
• 5 things to watch on the ASX 200 on Wednesday
• 5 things to watch on the ASX 200 on Thursday

Motley Fool contributor Aaron Bell has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.